New State Pension starting amount and full record of qualifying years- trial service

bigfreddiel

ericonabike wrote: »

I posted this in this thread in January:

"I am 59 and took early retirement from public sector in 2011 so delighted to find I have 40 years full NI contributions, even though I don't really understand why. On my current record I will be due £121.24 a week, but it appears I can buy added years any time between now and 2022, my official retirement year, which would bring me up to max. And so it seems I have not lost out by being contracted out?"

I have just gone back in to the beta check your pension site, to find that my new pension forecast is £149.58, an increase of almost £30 pw! Very pleased, but I have no idea why. This seems to lessen, if not eliminate, the need to buy added years. But anyone have any idea why the two forecasts should be so different?

It's a beta system, so it's under development.

I'm happy with my forecast, so I'm hopeful it is actually correct. In my case the old calculation gives me the higher amount and I'm 99% certain it's correct

Cheers fj

xylophone

I have just gone back in to the beta check your pension site, to find that my new pension forecast is £149.58, an increase of almost £30 pw! Very pleased, but I have no idea why. This seems to lessen, if not eliminate, the need to buy added years. But anyone have any idea why the two forecasts should be so different?

Are you sure that this is not on the basis that you will be continuing to contribute up to state pension age?

See post 21 ff. https://forums.moneysavingexpert.com/discussion/5445094

SnowMan

ericonabike wrote: »

I posted this in this thread in January:

"I am 59 and took early retirement from public sector in 2011 so delighted to find I have 40 years full NI contributions, even though I don't really understand why. On my current record I will be due £121.24 a week, but it appears I can buy added years any time between now and 2022, my official retirement year, which would bring me up to max. And so it seems I have not lost out by being contracted out?"

I have just gone back in to the beta check your pension site, to find that my new pension forecast is £149.58, an increase of almost £30 pw! Very pleased, but I have no idea why. This seems to lessen, if not eliminate, the need to buy added years. But anyone have any idea why the two forecasts should be so different?

The £149.58pw appears to be the projected amount based on the assumption that each post April 2016 year is a Qualifying Year whereas £121.24pw is your starting amount at April 2016 (so ignoring potential post April 2016 years).

Since

£121.24 + (6 x 4.45) + 1.64 = £149.58

My guess is that you reach SPA in the 2022/2023 tax year.

And the 6 above is because you have 6 potential post April 2016 Qualifying Years.

The £1.64 is assumed additional state pension for 2015/2016 perhaps.

Does that sound like the explanation?

ericonabike

Cheers Snowman - I remain in awe of your grasp of this! You are correct in your SPA assumption. I was doing a part time job, but currently am only getting an occupational pension on which I pay no NI. Is a year of this a qualifying year or am I required to get a job and pay NI for the forecast to come true?

SnowMan

ericonabike wrote: »

Cheers Snowman - I remain in awe of your grasp of this! You are correct in your SPA assumption. I was doing a part time job, but currently am only getting an occupational pension on which I pay no NI. Is a year of this a qualifying year or am I required to get a job and pay NI for the forecast to come true?

Unfortunately you won't get a Qualifying Year through getting an occupational pension.

Getting a job and earning over about £5,824pa would get you a Qualifying Year or you can get credits in some cases.

Alternatively you can pay class 3 voluntary contributions over time to buy the 2016/2017, 2017/2018 years etc. Currently the cost is £14.10pw (£733.20pa) which represents brilliant value for the extra £231pa (£4.45pw) gross state pension you are buying for each year. Depends a bit on your tax position but you only need to survive about 4 years after SPA to gain from paying class 3 (assuming you wouldn't qualify for means tested benefits).

xylophone

You are no longer paying or being credited with NI so if you are not employed and earning enough to pay or be credited with contributions, you will need to make voluntary contributions to increase your state pension to £149.58 ( which will be index linked to state pension age).

https://www.gov.uk/government/publications/national-insurance-application-to-pay-voluntary-national-insurance-contributions-ca5603


Post 448
https://forums.moneysavingexpert.com/discussion/comment/70499067#Comment_70499067

bry54

I Had this reply to my email from HRMC "

RE: Voluntary NICs



Thank you for your email of 6 April 2016.
We are advising our customers to wait until the end of September 2016 to allow our systems to be updated with their 15/16 tax year National Insurance Records.

Once this is taken into consideration then you will have your actual starting figure when you joined the new state pension on 6 April 2016.

The starting amount is needed to determine whether you may increase your state pension. Please therefore await the update (kindly note that rates for voluntary contributions currently applicable will remain the same until 5/4/19) and contact us after that for further advice."

I've also completed a form to pay VC's from 6th April 2016 three weeks ago but haven't received a reply yet.

dampsquib

My current prediction of pension based on records to 05/04/2015 is £120.12, but in January the prediction was £120.59.
I wonder which is the correct figure?
Current prediction based on me continuing to contribute is £126.34, but in January the prediction was £123.33.
The £3.01 (doesn't include inflation) increase doesn't seem to tally with either this year's increase, nor the extra (new system) pension earned by my 2016/17 automatic 'man-credit', or a combination of the two.
I'm basically on the old-system rate (+ a few extra pence) as most of working life was 'contracted-out'.
In 2013 on a printout, I was told my pre-1975 contributions were '202' and 4 years of credits were included in my record, but now the online system suggests that I have 5 years of pre-1975 credits, though it then goes to add up 5 + 33 (at work) + 1 (2014/15 automatic credit) to get 38 (instead of 39).

SnowMan

dampsquib wrote: »

My current prediction of pension based on records to 05/04/2015 is £120.12, but in January the prediction was £120.59.
I wonder which is the correct figure?
Current prediction based on me continuing to contribute is £126.34, but in January the prediction was £123.33.
The £3.01 (doesn't include inflation) increase doesn't seem to tally with either this year's increase, nor the extra (new system) pension earned by my 2016/17 automatic 'man-credit', or a combination of the two.
I'm basically on the old-system rate (+ a few extra pence) as most of working life was 'contracted-out'.
In 2013 on a printout, I was told my pre-1975 contributions were '202' and 4 years of credits were included in my record, but now the online system suggests that I have 5 years of pre-1975 credits, though it then goes to add up 5 + 33 (at work) + 1 (2014/15 automatic credit) to get 38 (instead of 39).

I'm guessing you reach SPA in 2017/2018, is that correct? And so

£126.34pw = £120.12pw + £4.45pw + £1.77pw

where £4.45 is your auto-credit for 2016/2017 and £1.77 is the blanket assumption (possibly or probably incorrect) for additional state pension earned for 2015/2016.

Hard to comment on the earlier figures.

Shouldn't really matter whether you have 38 or 39 pre April 2016 Qualifying Years.

dampsquib

Thanks for the input Snowman!
Yes, I hit 65 in 2017/18.
Lucky to be already retired though, so in 2014/15 and 2015/16, I just get two more auto(albeit worthless in my case)credits.